Govt rejigs Rs 200b unspent budget

July 15, 2018

The Kathmandu Post, 15 July 2018

The government has transferred over Rs200 billion from one budgetary allocation to another to increase spending as a large amount remains unspent.

According to Financial Comptroller General Office (FCGO), Rs208 billion was transferred from one allocation to another as of last weekend. This is 16 percent of the total budget of the current fiscal year.

The government’s budget for the current fiscal year is Rs 1.28 trillion and spending as on July 13 is Rs 1.02 trillion, according to FCGO that keeps a record of government’s income and expenditure.

A FCGO official said transferred amount might be even higher as there is an option in the Line Ministry Budget Information System (LMBIS) that allows the Finance Ministry to transfer budgetary allocation without notifying the FCGO.

LMBIS is the web-based system developed for line ministry to prepare annual work plans and budget proposals.

Details of amount transferred are out of bounds. FCGO Deputy Financial Comptroller General Rudra Prasad Bhatta said, “Most of the unspent budget was transferred in the last two months. We received many requests for transfer from various ministries.”

Officials said the government’s executing agencies have tendency to hold budget that cannot be spent until last months of the fiscal year with the hope that the planned projects could be executed.As it becomes clear in the final months of the fiscal year that some planned projects remain in abeyance, the budgetary allocation is then transferred to other projects where work is going on in speed.

“The large amount of transferred budget shows our executing agencies do not have the capacity to predict whether the particular project could be implemented in the specified time. This compels them to hold the budget for long time which could be transferred to other projects,” said an official of Department of Road (DoR).

This tendency has had a huge impact on other development projects that are progressing well, but lack budget. Therefore, contractors of these project do not get payments on time. This compels them to slow down their work.

For example, construction work of 800 bridges has halted because of payment delays since last month.

Citing the demands of contractors for payment of completed works, the Ministry of Physical Infrastructure and Transport (MoPIT) sought Rs14 billion from the Finance Ministry last week. The Finance Ministry said the MoPIT had Rs37 billion in its pocket unspent in different projects. Earlier, the Finance Ministry provided Rs12 billion to the MoPIT by diverting the MoPIT’s own resources as well as fresh resources.

According to the FCGO, the MoPIT witnessed the largest transfer of budget among the government agencies with transfer of Rs47.68 billion as of last week. In the Budget Implementation Guidelines, the Finance Ministry had told the ministries to surrender all budgets within mid-April of the projects whose implementation did not commence by mid-March. The government has failed to implement this guideline.